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Social housing budget to ‘contract sharply’ in 2015/16

The capital budget for the government’s main housing department is to be cut by 35.6 per cent in 2015/16, according to documents released alongside the spending review.

The Department for Communities and Local Government capital budget, worth £4.8bn in 2014-15, is to stand at £3.1bn in 2015/16.

However, the capital budget for 2010/11 – the corresponding year in the spending period cycle – was just £3.1bn, down from £6.8bn the year before.

The capital budget for 2012/13 was then set at £3bn.

It is unclear how much of 2015/16’s £3.1bn will go towards capital projects, but chancellor George Osborne said there would be “very positive” news on affordable housing when more details are announced tomorrow.

This total includes a number of emergency services and local government funds, but construction industry analyst Glenigan said the “vast majority” of the capital budget went towards housing.

The change, Glenigan said, suggests that “central government funding for new social housing provision will contract sharply in 2015/16”.

“Given the government’s stated desire to increase new housing supply, the funding reduction suggests the registered social landlord’s will be expected to fund new developments through increased private sector borrowing backed by near market rents.”

More details are being released when the government publishes Investing in Britain’s Future tomorrow, along with key details on infrastructure spending plans.

The £4.5bn Affordable Homes Programme, financed through DCLG and administered by the Homes and Communities Agency, is the government’s main programme for delivering social housing.

A spokesperson for the HCA said it was not aware of any cuts to its delivery programmes announced in the spending review.

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